Barry Ritholtz Midday Q&A Transcript

Barry Ritholtz (@Ritholtz) took time out of his busy schedule to participate in the StockTwits Midday Chat last week. He fielded a wide range of questions from our community – touching on his book Bailout Nation, indicators he watches to form investment ideas, thoughts on social media, and his borderline inappropriate relationship with Josh @reformedbroker Brown. No questions were off limits and Barry was up to the task.

His answers, peppered with links to some of his classic The Big Picture posts follows.

@StockSage1: Does the euro-zone accelerate their progress towards a federal/super-sovereign fiscal authority or continue wasting time? And does the ECB give in after the markets call their bluff? i.e. Monetize and continue to hold defaulted Greek paper as collateral?

@Ritholtz: Dunno about ECB — Like ours, their Bailouts encourage more bad economic behavior. Better off with pre-packaged bankruptcy.

@ctringham: What is the ‘normal’ correction size after a 100% rally like the one we had over the past 2 years?

@Ritholtz: Only 2 prior examples: 1933 and 1938 (100% rally following 50% or more selloff) Each time, nearly all the gains were lost!

@reformedbroker: What are we doing for lunch today?

@Ritholtz: Tradional Carbo loading ala Lindzon!

@harmongreg: when do you think (approx) we will see a bottom in housing?

@Ritholtz: Housing remains 8-10% overvalued; Question is will it revert to mean or careen past? Depends on UE and next recession.

@ivanhoff: does fusionIQ trade solely on an algorithmic basis and how often your does personal intuition override your system’s signals?

@Ritholtz: Fusion IQ is the tool we develop + use; Trading depends upon some additional factors, but goal is always Safe Alpha generation.

@enni82: What do you think of the future of solar power?

@Ritholtz: It is limited because the sun will burn out in 6 billion years. But if you can work with that time limitation. . .

@zerobeta: Does @ReformedBroker really write all his blog posts while listening to Sarah McLachlan?

@Ritholtz: He is actually a huge Indigo Girls fan, I am constantly telling him to turn that crap down!

@ajb_2010: Who’s your favorite actor from the Doctor Who series?

@Ritholtz: I’ve warmed up to the new doctor (Matt Smith) but adore David Tennant.

@gvwolf3: Suggestions on how to get into investment management industry? Equity research?

@Ritholtz: Fall assbackwards into it like I did!

@dominicrivera: who’s the better blogger? You or @thereformedbroker?

@Ritholtz: One day the student shall surpass the master.

@ReformedBroker: dude, cmon….

@ivanhoff: what was the biggest drawdown in your investment career?

@Ritholtz: With Options, 100% loss. With equities, nearly as bad early on. I swore that would never happen again, and consider it tuition.

@chicagosean: When your book Bailout Nation came out, you must’ve made some enemies in high places. Any good stories?

@Ritholtz: More nuanced than you would imagine. Less overt, more subtle. Life is too short to deal with jerks and creeps, so I ban commenters and block Tweeters with Extreme Prejudice.

@chicagosean: Any plans to write “Bailout Union” for our European friends?

@Ritholtz: None whatsoever; let the Europeans write their own damned books! Next book I write will be on using RISK/REWARD equation to obtain better results. Not market timing, but Opportunity Management.

@ivanhoff: how often are you wrong in your investment/trading decisions?

@Ritholtz: Wrong about half the time. Its part of investing — Secret is to max out when you are correct / minimize damage when wrong. One of my favorite things I’ve written was this (from 2005): “Expect to Be Wrong in the Stock Market”

@Ritholtz: Last thing on wrong: Call it “Strong Opinions, Weakly Held.” Trust your process, but be willing to reverse http://bit.ly/k0BvZd

@allstarcharts: what are a couple of your favorite leading indicators for the US Equities Market that you are currently watching?

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